China Reform Monitor: No. 1209

February 2:

Two Chinese military planes entered the overlapping air defense identification zone of China and South Korea, prompting Seoul to ready its fighter jets. The Chinese jets entered the zone near Jeju Island and flew out of it after South Korea sent a warning. "We took necessary surveillance and tactical measures," said a Korean military spokesman. In a statement sent to Yonhap, China's defense ministry denied that its planes intruded into South Korea's air defense zone. In 2013, South Korea expanded its air defense identification zone to cover Ieodo, a submerged rock. South Korea has scientific research facilities on Ieodo, which China also includes in its air defense identification zone.

[Editor's Note: The incident occurred amid a disagreement over the possibility that Seoul will introduce the advanced U.S. Terminal High Altitude Area Defense (THAAD) system. The Pentagon wants to deploy THAAD, citing North Korea's growing nuclear and missile threats. But Beijing opposes the plan, arguing that it is aimed at curbing China's military influence.]

February 4:

The Longjiang County People's Court in Heilongjiang has sentenced two officials to one year in prison for dereliction of duty after a prisoner seduced and blackmailed several women while behind bars. The former secretary of Nehe Prison's discipline inspection commission, and an official with the prison's management unit, failed to supervise their staff, the court said. Wang Dong, a prisoner at Nehe Prison since December 2012, used the cellphone messaging app WeChat to chat with several women who lived near the prison and "established romantic relationships with them" during incarceration. He extorted money from them by threatening to spread their nude videos and pictures. The blackmail came to light when one of Wang's victims reported the blackmail to police in late 2014. Last December, four former prison guards received jail terms from a year and four months to two and a half years, the official China Dailyreports.

February 5:

The Beijing Railway Station has started using facial recognition technology to identify passengers. Passengers with a second-generation identification card and a blue magcard ticket can use the new automated check-in. They must remove masks, sunglasses and hats and stand in front of a screen to have their picture taken and then wait for three seconds to be verified. "The use of face recognition technology is predicted to boom, and large-scale commercialization of the process is occurring," thePLA Daily reports.

February 9:

In 2015 the U.S trade deficit with China rose 6.6 percent to a record high of $365.7 billion, a $22.6 billion increase over 2014 levels, according to data released by the U.S. Census Bureau. Exports fell $7.5 billion to $116.2 billion and imports rose $15.1 billion to $481.9 billion. "For the past several years, the U.S. trade deficit with China has been significantly larger than that with any other U.S. trading partner. "Some analysts contend that the large deficit is an indicator that the trade relationship is unbalanced, unfair, and damaging to the U.S. economy," said a Congressional Research Service report published in December. A joint study by the Organization for Economic Cooperation and Development and the WTO estimated that "the U.S trade deficit in China would be reduced by 25% (in 2009) if bilateral trade flows were measured according to the value-added that occurred in each country before it was exported," the report said.

February 10:

More than $110 billion in capital fled China in January alone, marking the 22nd month in a row of net outflows and pushing China's foreign exchange reserves to their lowest level in almost four years. The People's Bank of China spent an estimated $90 billion to prop up its currency in January; more than a quarter of the $342 billion it spent all of last year to prop up the currency. "If anything it looks too low," said a senior market strategist at RBS in Singapore, referring to the January estimate. In 2015, an estimated $637 billion left China. To circumvent official capital controls, Chinese companies and residents use unofficial channels, such as over-invoicing for exports, Financial Timesreports.